Subscription Merchant Account Solutions

A subscription merchant account is a kind of payment processing account that is specifically for companies whose model is based on recurring billing. These accounts help subscription based companies to manage the auto recurring billing of customers and make payments at regular intervals. Normal merchant accounts are not suitable for subscription merchant accounts as they were not created to meet the special needs of recurring billing transactions.

Why You Need a Different Type of Merchant Account for Subscription Businesses

Subscription business model presents certain payment processing issues that are quite distinct from those of other models for which specific merchant accounts are required.

• Recurring Billing Complexity: Subscription businesses require a set of tools that would enable them to make recurring payments on different terms (monthly, yearly, etc.) without the need for human intervention.
• Higher Chargeback Risk: Subscription businesses are prone to high chargeback rates as customers may forget the recurring charges or fail to unsubscribe from the services they no longer want.
• Card Failure Management: As subscription businesses have long-term customer relationships, they must deal with payment problems caused by the expiry, loss or replacement of credit cards.
• Customer Retention Challenges: This paper will also consider the consequences of failed payments on customer retention and ways to manage the situation.
• Risk Classification: A large number of subscription businesses are classified as high risk due to the card-not-present, future delivery nature of their business.

What Characteristics Make Good Subscription Merchant Accounts?

When choosing subscription payment processing solutions, businesses should try to include the following features:

1. Robust Recurring Billing Engine: A strong system that can manage all kinds of subscriptions including the subscription details such as the frequency of the billing, the free trial, setup fee, and the different levels of the pricing tiers.
2. Intelligent Retry Logic: Sophisticated techniques that attempt transactions again at the optimal times in order to increase the success rate without leading to the fraudulent transactions.
3. Account Updater Service: The tools that are used to identify the customers’ cards have been replaced or updated and automatically update the payment details stored in the account.
4. Dunning Management: Systems that are used to manage communication with the customers in case of payment problems and to send requests to recover failed payments.
5. Subscription Analytics: Information on MRR, LTV, churn rates and cohort performance as well as other important subscription metrics.
6. Fraud Prevention Tools: Specific fraud detection for subscription transactions, to distinguish between normal recurring payments and other potentially fraudulent activity.
7. Integration Capabilities: Simple and easy connection with subscription management platforms, CRM systems, and other business tools.

Recommendations for Subscription Payment Processing

To enhance the effectiveness of your subscription payment management, do the following:

• Clear Billing Communication: Make sure that your customers know what they are signing up for, including the frequency of billing, the amount to be billed and how to cancel the service.
• Pre-Billing Notifications: Auto-transaction alerts that happen one day before actually processing the recurring charges to decrease the likelihood of chargebacks.
• Strategic Retry Schedules: Instead of using basic sequential attempts, develop optimal retry patterns based on the data analysis.
• Payment Method Diversity: Provide other forms of payment besides credit cards such as ACH or bank transfer, or digital wallets to use in case of a primary method failure.
• Descriptive Billing Statements: When receiving statements from the bank, customers should be able to easily identify the subscriptions that they own from the clear and recognizable billing descriptors.
• Regular Performance Analysis: Monitor subscription metrics and payment success rates on a regular basis to look for opportunities to improve.

Why Adaptiv is the Best for Subscription Merchant Accounts

Adaptiv is a payment processing company that offers all-inclusive subscription payment processing solutions to overcome the challenges of the recurring model. Subscribtion companies are therefore able to benefit from:

• An advanced subscription management system with a robust recurring billing engine.
• Franchise model with retry logic that is better than that of standard processors by 25%.
• An automated account updater service that automatically switches to the new card details.
• Vast dunning management system that enables the creation of communication flows that suit the company’s needs.
• Subscription analytics dashboard that provides valuable business insights.
• Specialist fraud prevention for subscription transaction patterns.
• Account managers who are well conversant with subscription business models.

When you decide to go for subscription merchant account from Adaptiv, you are exposed to a payment processing environment that was been designed to enhance the recurring revenue, decrease the churn rate and support the growth of the business. Subscription specific issues that we focus on ensure that your recurring billing operations are efficient and you can concentrate on offering value to your subscribers.